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In this module, it is demonstrated that some times extensive diseconomies of scale, say, due to high transportation costs, would require that the firm produce its product in a multiple of plants. Suppose a beer brewing company has determined that its total production cost is: TC = 1000 Q - 1.2 Q2 + 0 .004Q3 where Q is its annual output measured in metric tons. A. The average hauling (freight) cost is $0.8Q; that is AFC = 0.8Q. Write the firm's average aggregated cost equation. B. Now suppose the firm is facing the following market demand: Q = 760,000 - 10 P Determine the optimal number of plants that the firm should have to take full advantage of the market demand. C. Calculate the firm's profit. For 5 extra bonus points: D. Compare the firm's profit with multiple plants with its profit with a single plant. Hint: The firm's MC equation based on its aggregated total cost (including the freight cost) is: MC = 1000 - 0.8 Q + 0 .012 Q2
Government increases taxes by 50 billion and increase transfer payments by 50 billion illustrate what would happen to aggregate demand.
Larry Bush, was on his second audit job on the East Coast with a new client called FSK. He was looking through the past four years of financials and doing a few ratios when he noticed something odd. Bush discovered that the company was clearing the r..
Future value of an annuity Your client is 36 years old; and she wants to begin saving for retirement, with the first payment to come one year from now. She can save $5,000 per year; and you advise her to invest it in the stock market, which you expec..
In some states, mining for coal leaves large amounts of rubble, which poses flooding problems; causes land damage also is unsightly.
How does the price elasticity of demand for corn oil influence the quantity-demanded of corn oil and the Total Revenue earned by sellers of corn oil? Explain, using economic terms, why this is so.
The job order and process costing systems are
What happen if he goes to market, he must feed the horse 50lbs of rice. draw the budget constraint for beans and rice
In the solow model, the level of investment depends on the level of domestic savings. If the level of domestic savings is too low to allow the economy grow to the Golden Rule level without taxation, what other sources could this economy try to tap in..
A local car dealer is advertising a 24-month lease of a sport utility vehicle for $520 payable at the beginning of each month. The lease requires a $2,500 down payment plus a $500 refundable security deposit that is refunded at the end of the 24 mont..
Suppose that after five years consumer spending doubles to 400. Explain how much do you believe will be the budget share of leisure.
Suppose that demand for rollerblades is given by D(p) = A ? p. The cost function for all firms is C(y) = wy2 + f , where f is a fixed set-up cost. The marginal cost of production is MC(y) = 2wy. Assume that the industry is perfectly competitive. Find..
Shows short run cost and demand curves for a monopolistically competitive firm in the market for designer watches. 17) Refer to Figure 10-3. What area represents the total variable cost of production? a. 0P0aQa b. P0abP1 c. P1bdP3 d. 0P1bQa
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